We propose to investigate a novel mechanism by which membrane-type 1 matrix metalloproteinase (MT1- MMP, MMP-14) controls bone formation. MT1-MMP, an extracellular matrix-degrading, transmembrane proteinase with a 20-amino acid cytoplasmic tail, plays key roles in postnatal bone formation. In humans mutation of MT1-MMP causes the multicentric osteolysis and arthritis disease, Winchester syndrome. In the mouse MT1-MMP deficiency causes dwarfism, osteopenia and severe arthritis. MT1-MMP deletion in bone marrow-derived mesenchymal progenitor cells (MSC) fully recapitulates this phenotype, showing that MT1- MMP controls osteogenic differentiation in MSC. It has been proposed that the phenotype of MT1-MMP-/- mice results from the lack of the proteolytic activity of MT1-MMP. However, mounting evidence shows a variety of proteolysis-independent signaling functions of MT1-MMP. The unique tyrosine residue (Y573) in the MT1-MMP cytoplasmic tail is fundamental for the control of intracellular signaling. We have shown that Y573 controls activation of the Ras-ERK1/2 pathway, and that Y573 substitution with aspartic acid (D), a negatively charged amino acid like phosphotyrosine, blocks this function without affecting MT1-MMP proteolytic activity. We have therefore generated a mutant mouse with the Y573D substitution in the cytoplasmic tail of MT1-MMP. Our extensive studies of the phenotype of this mouse have led us to the unexpected and surprising finding that, MT1-MMP Y573D mice have a phenotype opposite to that of MT1-MMP-/- mice. Both homo- and hemizygous MT1-MMP Y573D mice show increased bone mass, increased osteoblast differentiation from MSC and decreased osteoclast differentiation from myeloid precursors. Importantly, MT1-MMP Y573D expression dramatically upregulates Wnt signaling in MSC. This is a novel and unexpected function of MT1-MMP that can be exploited for the generation of innovative treatments for a variety of conditions that alter bone homeostasis. Therefore, we propose to study it by developing the following Specific Aims: Aim 1) To generate and characterize the phenotype of mice with conditional expression of MT1-MMP Y573D in bone. We have already generated a MT1-MMP Y573D mouse in which the MT1-MMP locus contains a floxed neo cassette. Mice hemizygous for the neo cassette are phenotypically normal. We will cross these mice with mice that express Cre recombinase in either MSC or committed osteoblast progenitors, or in myeloid precursors of osteoclasts. Deletion of the neo cassette will result in heterozygous MT1-MMP Y573D mice, which have the phenotype we described. We will then analyze their bone phenotype, osteoblast and osteoclast differentiation and Wnt signaling. Aim 2) To characterize the role of MT1-MMP signaling in bone development and remodeling. We hypothesize that the phenotype of MT1-MMP Y573D mice can be transferred to wt mice by bone marrow transplantation. We will therefore transplant bone marrow from wt or MT1-MMP Y573D mice into young or adult, wt and MT1-MMP Y573D mice, and analyze their long bones 8 weeks post transplant.